Mulberry share price: House of Fraser has ripple effect on Mulberry Stock

The effects of the ongoing troubles with the House of Fraser have dramatically affected the share value of Mulberry today (LON:MUL) with stock value plummeting by 30% to 400p in initial trading.

Mulberry share price: House of Fraser has ripple effect on Mulberry Stock

Share price has been more stable this afternoon after the initial drop. As of 13.47 BST it stood at 450.00p, a fall of 20.91 per cent.

House of Fraser impact

The luxury bag manufacturer has been hit significantly by House of Fraser going into administration and is having to plan to cover £3 million in costs as a result. The company has warned investors that these effects are going to be felt throughout the year due to the challenging nature of the UK market, this being directly linked to its sales through the House of Fraser store.

The company has advised its investors: “If these sales trends continue in the UK into the key trading period of the second half of the financial year, the group’s profit for the whole year will be materially reduced, as quoted in the Guardian. 

Weak pound  

The company, which operates 21 stores within the House of Fraser chain, employing around 88 staff, had also reported a loss of sales as a result of the weak pound, with international consumers preferring to shop elsewhere in Europe. 70% of the company’s sales are UK based, and as highlighted by Rebecca O’Keefe, Interactive Investor, share value has fallen 50% over the last year, with House of Fraser only compounding this.

Mulberry statement issued to assuage concerns

House of Fraser fell into administration earlier this month before being purchased by Mike Ashley’s Sports Direct. However, present uncertainty about how many stores Mulberry remains in fuels the concern. At the time of the administration, Mulberry was owed 2.41 million pounds. The company is attempting to highlight this is all to be expected and retains its belief in the future advising: “The group is in a strong cash position and continues to follow its strategy to develop Mulberry into a global luxury brand.” reported in the Guardian.

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